Lecture 1: An Introduction to Supply (Chain)
Management
‘Chain’ : one direction or linear-ness
Lecturer removed this word as it doesn’t apply
What is supply chain management?
“The management of upstream and downstream relationships with suppliers and customers in
order to deliver superior customer value at less cost to the supply chain as a whole” (Christopher
2016)
[recognition of a ow of stu ] Upstream and downstream : upstream:towards a source downstream:down towards a
customer
Upstream: e.g. a dude owns the river, iron mine -> directly extracting from the source
Superior customer value: exchange —> moving money as well as stu : how e ectively money ows? How quickly I can
get paid. E.g. amazon gets money from everyone and then pay their suppliers -> making the margin
Messy? -> competitors can also sell you stu .
e.g. a shop can have an app to sell, they may not be managing the app, they might not be selling it as well-> third
parties are involved in this transaction. (RHS of the diagram) [TRIAD]
Example of kit kat
Facts:
Japan has over 200 avours
21 countries
Format is di erent: ngers varies in di erent countries. e.g. New Zealand
They make a lot: 1 year of kitkat production can cover London Underground
Ingredients: carribbean, whey, palm oil, coca…
Controversy : palm oil : bad for the environment -> deforestation in Indonesia and Malaysia
Complex networks and so we talk tiers?
First and last mile, middle-mile, etc.
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,Tiers: a way to simplify these complex network.
Tier 1, tier 2, intermediaries
What about a project supply “chain”?
Repetition in specialisation creates a supply system: rhythmic
Example of a supply chain
1. Point of entry: where do you start?
End customer: the person who order the ship. But the person who wants to use the ship may not
buy the ship. Through intermediaries. The way you play a ects the supply chain
2. Design team?
3. Size of the ship. Buying an equipment that might not happen until years later.
Steel: right volume, right time: place an order years ahead of time
4. 5. …. all comes together
7. Fuel and refuel: done by another party
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, Where does the “chain” end?
Maybe when the ships get broken: e.g. Shipbreaking yards in Alang-Sosiya, Gujarat, India
Is this the end? Boundaries a ects decision making
What is a system...
Linked variables (& loops) inside a boundary?
e.g. im going to include the battery and not the lithium
Supply chain only becomes visible when it becomes a problem
When supply chains break..
A PS5: there was a shortage during the launch:
There’s people w money that can’t get it. Excess demand?
B toilet tissue: culture issue: SHIFTING CHANNELS. You go from working to staying at home.
The demand is moving channel: the demand shifts from work to home. In work they provide huge
rolls, but the demand shifted to domestic rolls [toilet paper].
C shortage of mask: one part of the supply was in shortage. Economic
D port in Shanghai. A lot of the containers were in LA. they can’t unload as there were no space in
the port, blockage. Creates a queue : change in the velocity of the system works. Its not that we
don’t have enough, they are in the wrong place in the wrong channels
E run out of truck drivers: partly caused by Brexit. Slight change in the age pro le: going into
pandemic, people are retiring. Not well played employment. Price is increasing, as the shortage,
in ation. Global wage pressure. Harder to nd people to do the work at the wage implied
F: they moved from the previous supplier [with 11 warehouses] to DHL [operate to 2 warehouses].
Cheaper. But it opens up a risk: there was a fatal crash and stopped the trucks. Fresh products
gets backed up,.
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, A service supply chain/network?
Criminal Justice...
It is a service supply system: physically moving people around, psychologist analyse if he is t for
trial. Exchange of information. Commercial entities, police service
Why study supply management?
It is how rms thrive and survive..
Customer value
- On time, every time, in full Increased complexity of o ering
- Shorter product lifecycles
- Faster speed of delivery, etc.
Expectations of supply system : quick, reliable: fed by platform providers
Amazon prime: next day delivery: gives undue expectations
If you can’t manage your supply chain, you can’t compete . E.g. peloton
E.g. basketball players has to be tall but the tallest basketball player is not the best player.
Technology
• Platforms, Omni-Channel, etc.
• Data, tracking, etc.
• Digital disruption, AI, ML, etc.
Turbulence and volatility
• Globalisation (WTO)
• Geo-politics (trade, con ict, piracy, etc.)
• Climate change – Scope 3
• In ation?
Although the customer expectation is there, the delivery is going to be hard.
Global Supply Chain Pressure Index
New composite metric...
China : zero covid policy: central supply chain: causing supply system today:
Pressures: such as the pandemic can a ect the supply chain
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